Peloton IPO: 5 things to know about the interactive exercise-machine company

Peloton Interactive Inc. is a company that sells connected exercise machines and fitness classes.

However, according to the very first substantive section of Peloton’s PTON, -13.28% filing for an initial public offering, that is not what the company is. Instead, it is described as a technology company, a media company, a software company, a product-design company, a retail company, an apparel company and “a social connection company that enables our community to support one another.”

Chief Executive John Foley had yet another explanation in a letter to prospective investors: “Peloton sells happiness.”


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Peloton Falls 14.6% in 3rd-Worst Unicorn IPO Debut Since ‘08

September 26, 2019

(Bloomberg) -- Peloton Interactive Inc. fell as much as 14.6% Thursday after raising $1.16 billion in its U.S. initial public offering, becoming the latest unprofitable startup to fail to win over investors in its trading debut.

Peloton’s shares opened at $27 and were down 13.6% from their offering price to $25.05 at 3:06 p.m. in New York trading, giving the company a value of $7 billion. The fitness startup sold 40 million shares for $29 each on Wednesday, after marketing them for $26 to $29.

It marks the third-worst trading debut in 10 years in the U.S. for companies that have raised at least $1 billion, according to data compiled by Bloomberg. The IPO also comes as investors have been rattled by the sudden disintegration of WeWork’s plan to go public in September.


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Peloton says recent spike in Covid-19 cases, lockdowns are boosting sales

Thu, Nov 5 2020

Peloton is seeing demand for its high-end exercise bikes and treadmills spike again, as Covid-19 cases are rising at a record clip in America, and consumers are hunkering down at home ahead of the winter months during the pandemic.

Peloton Can’t Keep Up With Demand; Profit to Be Squeezed

February 4, 2021

Peloton Interactive Inc. said it can’t keep up with surging demand for the company’s technology-focused exercise machines, reporting its first $1 billion sales quarter and warning that profit will be squeezed as it tries to fix the problem. The shares dropped about 8% in extended trading.

Peloton to make $420 million acquisition aimed at catching up with backlog of orders; stock jumps

Dec. 21, 2020

Peloton Interactive Inc. plans to acquire a company to help it catch up with all of the exercise bikes and treadmills that customers have been ordering during the pandemic, and investors seemed to like the deal Monday afternoon.

Peloton PTON, -16.52% announced Monday afternoon that it has agreed to acquire another manufacturer of exercise equipment, Precor, at a valuation of $420 million. The deal is aimed at helping Peloton manufacture and deliver more of its exercise equipment, after the company was overwhelmed with orders after the COVID-19 pandemic shut down gyms and forced people across the world to shelter in their homes.

Peloton to halt production of its Bikes, treadmills as demand wanes

Thu, Jan 20 2022

Peloton is temporarily halting production of its connected fitness products as consumer demand wanes and the company looks to control costs, according to internal documents obtained by CNBC.

Peloton plans to pause Bike production for two months, from February to March, the documents show. It already halted production of its more expensive Bike+ in December and will do so until June. It won’t manufacture its Tread treadmill machine for six weeks, beginning next month. And it doesn’t anticipate producing any Tread+ machines in fiscal 2022, according to the documents.

The company said in a confidential presentation dated Jan. 10 that demand for its connected fitness equipment has faced a “significant reduction” around the world due to shoppers’ price sensitivity and amplified competitor activity.

Peloton has essentially guessed wrong about how many people would be buying its products, after so much demand was pulled forward during the coronavirus pandemic. It’s now left with thousands of cycles and treadmills sitting in warehouses or on cargo ships, and it needs to reset its inventory levels.

Peloton stock surges on reports Amazon and Nike are among potential buyers

Fri, Feb 4 2022

Peloton has been battered and beaten down so much so in recent months that the connected fitness company is now attracting interest from outsiders.

Shares of Peloton surged more than 30% in extended trading Friday after The Wall Street Journal reported e-commerce giant Amazonhas approached the company about a potential deal. Other potential suitors are circling, the Journal said, but no deal is imminent and there may not be one at all.

The Financial Times separately reported that sneaker maker Nike is evaluating a bid. The talks are preliminary, it said, and Nike has not spoken with Peloton.

Representatives from Peloton and Nike didn’t immediately respond to CNBC’s request for comment. Amazon declined to comment.

The potential interest from outsiders comes as Peloton shares have tumbled in recent months and activist group Blackwells Capital, which has a less than 5% stake, has urged the company publicly to consider a sale. In its letter to Peloton’s board, which also called for Chief Executive John Foley to be fired, Blackwells speculated that potential buyers could include Apple or Nike.

Peloton could be an attractive target, given the selloff, for any company looking to further its ties to the health and wellness industry. Amazon has been investing in connected health for years, including by launching a Halo Health and Wellness tracker. And last year, Amazon added interactive home video workouts and guided meal planning to Halo subscriptions.

It’s not immediately clear what Amazon would do with Peloton’s hardware and technology, but it’s possible Amazon could integrate Peloton’s offerings into its growing devices unit, which houses its popular Fire TV streaming sticks, voice-activated Echo smart speakers and an expansive lineup of connected home products.

According to the Journal, Amazon’s existing businesses, such as its logistics arm, could also further help Peloton address ongoing supply chain issues. A monthly Peloton subscription, which is $39 for people who own one of its connected devices, could also theoretically be bundled into Amazon’s Prime membership, it said.

Peloton is set to report fiscal second-quarter results on Tuesday, after the market close, and all eyes will be on its full-year outlook. Peloton last week preannounced a handful of second-quarter metrics, including revenue, which is expected to be within its expected range, and connected subscribers, which came up short of its own estimates.

Back in November, Peloton slashed its fiscal 2022 forecast as it reported slowing revenue and waning subscriber growth. Foley warned at the time that it was becoming more difficult for Peloton to project growth, as it lapped massive pandemic gains.

Through 2020 and into 2021, Peloton invested heavily to ramp up its supply. It hired thousands of more employees to help with customer service requests and home deliveries. But that has left the company with a bloated cost structure.

CNBC reported last month that Peloton is working with consulting firm McKinsey to look for areas to cut costs, which will likely entail layoffs. Peloton is also planning to right-size its production.

Some analysts have argued that the selloff in Peloton shares has resulted in the market undervaluing the company’s existing base of connected fitness subscribers. Peloton counted about 2.5 million at the end of its first quarter. Its entire member base, which includes digital-only subscribers, totaled 6.2 million. These could be valuable assets for any potential suitors.

In a note to clients dated Jan. 20, Loop Capital Markets said that Peloton’s subscription business alone could be worth “substantially more” than the company’s current market value.

Analyst Daniel Adam said that assuming the most recent count of 2.5 million connected fitness subscribers, the business could be worth as much as $80 per share. He added that this valuation makes Peloton more comparable to Netflix.

To be sure, in order for any deal to go through, Foley must be in agreement. The CEO along with other insiders have shares giving them control of more than 80% of Peloton’s voting power.

Amazon has made several large, notable acquisitions in recent years. Amazon purchased upscale grocer Whole Foods for $13.7 billion in 2017, its biggest deal by far. Last May, it inked a deal to acquire MGM Studios for $8.45 billion.

Peloton posts loss, slashes its full-year revenue outlook as founder steps down from CEO post

Tue, Feb 8 2022

Peloton on Tuesday slashed its financial outlook for the full year after the company announced CEO John Foley will be stepping down, as part of a broader restructuring of the business.

It now sees fiscal 2022 revenue within a range of $3.7 billion to $3.8 billion, down from a prior range of $4.4 billion to $4.8 billion.

The company said it expects to end the year with about 3 million connected fitness subscribers, versus previous estimates of 3.35 million to 3.45 million.

For the three-month period ended Dec. 31, Peloton reported a net loss of $439.4 million, or $1.39 per share, compared with net income of $63.6 million, or 18 cents a share, a year earlier.

Total sales grew about 6% to $1.13 billion from $1.06 billion a year earlier. Peloton had reported preliminary second-quarter sales figures in late January.

Revenue in Peloton’s connected fitness segment, which includes contributions from its manufacturing business Precor, fell 8% from year-ago levels to $796.4 million. This division makes up about 70% of Peloton’s total revenue.

Subscription revenue grew a whopping 73% to $337.5 million, making up the other 30% of total sales.

Peloton ended the quarter with 2.77 million connected fitness subscribers. These are people who own a Peloton product and also pay a monthly fee to access the company’s digital workout content.

For its third quarter, Peloton anticipates sales between $950 million and $1 billion. It expects to end the period with 2.93 million connected fitness subscribers.

Peloton to Stop Making Bikes Itself

July 12, 2022

Peloton Interactive Inc. will outsource all manufacturing of its stationary bikes and treadmills as the money-losing maker of connected fitness equipment races to overhaul its business model.

The New York company said Taiwanese manufacturer Rexon Industrial Corp., which has been working with Peloton for years, will become the primary maker of hardware for its bike and tread product lines.

The change reverses a pandemic-driven strategy to bring its production in-house. It will reduce the cash burden on the business, said Peloton Chief Executive Barry McCarthy, who had already scrapped plans to build a factory in Ohio.

Peloton also said it will suspend operations at its Tonic Fitness Technology Inc. plant for the rest of the year. The company acquired Tonic, one of its longtime Taiwan-based bike-manufacturing partners, in October 2019.

Peloton spent hundreds of millions of dollars in the past couple of years to build in-house U.S. production capacity, believing that pandemic-driven demand for its products would remain elevated for years and that it could avoid ocean-shipping logjams by operating U.S. sites.

But sales of equipment have fallen more than 40% from a year ago as people return to gyms and pre-Covid-19 routines.

Mr. McCarthy, a former Netflix Inc. and Spotify Technology SA chief financial officer who took over the CEO role earlier this year from founder John Foley, wants to turn Peloton primarily into a subscription-based company rather than an equipment manufacturer.

Peloton has substantially cut the prices of its bikes and treadmills, which are equipped with a tabletlike screen that connects users to online workout classes, while raising the price of monthly subscriptions to $44 from $39. Though subscription growth has slowed, millions more people subscribe to Peloton than before the pandemic.

Under Mr. Foley, Peloton spent $420 million to buy Precor Inc., a maker of commercial exercise equipment with two U.S. factories. Then it announced plans for a $400 million Ohio factory — which it now intends to sell once construction is complete — in a strategy shift for a brand that until then had relied largely on third-party manufacturers in Asia.

In May, Peloton reported its biggest quarterly loss as a public company and said it had raised $750 million to help sustain its business.

The company has laid off hundreds of workers and is saddled with a glut of unsold inventory.

Peloton, once worth around $50 billion, now sports a market capitalization of less than $3.4 billion.

KEY POINTS

• Peloton told employees Friday that it is slashing roughly 780 jobs, closing a significant number of its retail stores and hiking the prices of some of its equipment in a bid to cut costs and become profitable.
• The company didn't specify how many its 86 retail locations it plans to shutter, but said it plans for an "aggressive" reduction beginning in 2023.
• The company said it will be entirely exiting last-mile logistics by closing its remaining warehouses and shifting delivery work to third-party providers like XPO Logistics.

The embattled founder will leave the company's board of directors, Peloton stated Monday. The decision comes months after Peloton hired former Spotify exec Barry McCarthy as CEO.

"The company has accepted the resignations of John Foley as Executive Chair and Hisao Kushi as Chief Legal Officer, effective September 12, 2022 and October 3, 2022, respectively," a press release stated.

Kushi will be replaced by Tammy Albarrán, who most recently served as Uber's chief deputy general counsel and deputy corporate secretary.

A source told Yahoo Finance that Foley — who along with his wife and other insiders controls close to 60% of Peloton's voting shares — may sell his stake in the company after a cooling-off period.